Silent Partnerships?

[dieseldre2001]

I am looking to get into a silent partnership. I would be the investor and would not be there to for day to day operations. What is the best way for me to watch over the accounting aspect of the business without being there everyday? What is the best software to use? I am not saying that I dont trust my partner, but I would still like to be able to monitor sales.

Any insight is very helpful.

[brianaaron]

software, we would need to somewhat know what kind if business it is. i have done this before everything was done by contract

[myfayt]

If you tell what the business is exactly, it'd be easier. Like if it was a retail shop, you can request the daily Z report. Which will show the full sales with and without tax. Some registers break it down to which items were sold, others just show a grand total.

If it's something where it's a cash business such as vending or a gas station. You might want to reconsider unless you fully trust this person and they give you no reason to doubt.

[speedguy]

Its your first post here. You don't know a single soul. And you are going to trust your money and ideas and be a silent partner in a venture?

[santoshtanu]

I feel it is not a very smart move as far as investment is concerned .One has to give some time and efforts .And if you don't want to get into daily nitty gritty give it to some NGO who works to help underprivileged .Because at least you know you have invested on some good project.

But giving you you a professional advise study your what business you want to invest and then the returns you can expect and time frame.And yes study the business plan of the concern business partner of your.
All the good Luck .Hope you achieve what you are looking for.

[akula]

I am looking to get into a silent partnership. I would be the investor and would not be there to for day to day operations. What is the best way for me to watch over the accounting aspect of the business without being there everyday? What is the best software to use? I am not saying that I dont trust my partner, but I would still like to be able to monitor sales.

Any insight is very helpful.

hi..i see what the problem is
your solution is to change the terminology
instead of being a "silent partner", what you wanna do is be a "shareholder" and "board member", so you can passively supervise the day to day running of the business by the "management"
..to that end, one convinient way to supervise the venture's cashflow is to set up an SMS alert on your company's bank account, so you get a notification of all major deposits and withdrawals

[dieseldre2001]

Thank you all for your quick replies. All this info is very helpful. Just to give you a better idea, its a hearing aid business.

[dieseldre2001]

If you tell what the business is exactly, it'd be easier. Like if it was a retail shop, you can request the daily Z report. Which will show the full sales with and without tax. Some registers break it down to which items were sold, others just show a grand total.

If it's something where it's a cash business such as vending or a gas station. You might want to reconsider unless you fully trust this person and they give you no reason to doubt.

What kind of software gives you a Z report?

[jayer]

Well if its a traditional cash register... a Z report is literally just a receipt with all of the numbers on it. I'm sure these advanced POS systems have a method of e-mailing or exporting the Z reports, but I have no experience with them.

[myfayt]

Yeah it would be on the cash register, turn the key to Z and it prints all the daily totals, some you can display a full weeks total. I don't know much about the POS systems with what other things you can do like email and all.

[JLeezer]

hi..i see what the problem is
your solution is to change the terminology
instead of being a "silent partner", what you wanna do is be a "shareholder" and "board member", so you can passively supervise the day to day running of the business by the "management"
..to that end, one convinient way to supervise the venture's cashflow is to set up an SMS alert on your company's bank account, so you get a notification of all major deposits and withdrawals

It doesn't happen often, but I fully agree with akula on this. You are looking to become passive management, not a passive investor (well, actually you'll be both, but the management part is to protect the investor part). The key to ensuring that everything is done legitimately and accurately can be summed up with this: regular and thorough reviews. Whether you are reviewing product documentation to ensure that safety standards established by the operational management are sufficient to protect the consumer or the company, or you are reviewing the books with an independent auditor, you must make it known that while you are not going to manage the day to day operations of the company in anyway, you will still be managing the company from an oversight perspective.

[rogercbryan]

It makes me a little nervous that you want to invest in a company and only track sales? Being a successful investor or at least an investor in a successful company will take a lot more then just tracking sales. The company should run on Quickbooks (or similar). You should have remote access to the system or a process by which you get a weekly cash flow, balance sheet, profit and loss, as well as a budget. Over time you might need to watch less and less... but if this is going to be your first investment you would be wise to learn the fundamentals of this business and general business as well.

If you are an experienced investor then you could take a different approach. I'm going to wager based on this threads topic that this is your first investment so give what I said a try...

[Usman Sheikh]

I have been involved in such arrangements in the past and they have been challenging. Some suggestions for your current scenario could be:

1. Get the active partner to send you a weekly or bi weekly updates on a set of figures such as sales, marketing, finances etc. This way you have constant interaction with the partner and in a way they tend to take things a lot more seriously because of the accountability aspect.

2. Get your accounting system set up either using something like Quickbooks that has an online version or ask for certain types of reports on a periodic basis.

3. Get the person to commit to some forecasts for the quarter and I would suggest in person meetings if possible at the end of every quarter to evaluate the current quarter and see how things can be improved in the future.

I understand the fact that you want to be a silent partner and want to limit the amount of work needed. However like any other investment you make whether it be real estate or stock there will need to be a certain amount of supervision required to monitor the health of your investment.

[dieseldre2001]

I dont want anyone to think that I dont want to be a part of the business, beacause I do. I want to see and manage everything that goes on.

What do you think is a fair/typical % of ownership for a "silent partner"?

[rogercbryan]

I dont want anyone to think that I dont want to be a part of the business, beacause I do. I want to see and manage everything that goes on.

What do you think is a fair/typical % of ownership for a "silent partner"?

This makes me nervous as well. There is no such thing as a fair/typical answer to this question. Every deal is different. You need to consider things like amount invested, risk level, projected ROI, growth potential, and level of your involvement. There is no exact formula for this...

Have you started your negotiations with your partner?